Selling a house to my parents

Hi

I have an outstanding mortage of €100000 on a house in Clare that I bought with my parents ( but it's in my name only) about 10 years ago. I paid £80,000 at the time and extensive renovations were carried out. My question is... Can I sell it to my parents for the amount of the outstanding mortgage and my Father pays stamp duty on that amount? It is probably worth more than €100,000 even these days but its' still only worth what someone would pay for it. ie. €100,000.

I am married now and my parents want the house in their name as they are the primary users of it. I will inherit it back so I am not bothered about any money I have put into it over the years.

Nudge, nudge, wink, wink, Eh!!!! I reckon Revenue would never think that anyone might think like that!

Stamp duty is based on market value. You'll need a valuation from an estate agent to support any value you choose to place on the property. While property prices have dropped, you would be well advised not to take Revenue for mugs.

See this extract from Revenue Guide to Stamp duty SD10A
"Gifts
A transfer by way of gift is chargeable in the same manner as a transfer on sale with the substitution of the market value of the property for the consideration. In the case of a gift, the appropriate transaction certificate (see Nos. 8C-F in Table 4) should be inserted and amended to substitute market value for consideration as appropriate."


mf

Also, and I'm not absolutely sure about this, your parents would be getting a gift from you which would be liable to CAT? i.e if the house is worth €300,000 and they pay €100,000 they are getting a gift from you of €200,000 which will be subject to CAT.

Thanks, but some points. If I went to sell the house today I figure it wouldn't fetch much more than I paid for it, houses in Clare are not selling. I'm not trying to do a "nudge nudge wink wink", just trying to transfer the property for the minimum stamp duty and with the minimum hassle. It's complicated by the fact that valuations are meaningless at the moment. People are selling for below valuations if they can get a buyer!

If I were in negative equity, struggling with repayments and needed to sell and my parents could buy out the house in settlement of the mortgage, would that be allowed. The whole thing is subjective.

Also my parents inherited the house they live in so maybe they would be 1st time buyers and not subject to stamp duty anyway? They do have a mortgage on their current inherited home. And to complicate matters further they are selling at the moment and will be buying again in the next two years. If Market settled. If they are first time buyers they should put off the transfer until after that as their next house would be in the 400k to 500k bracket with much higher duty. Also maybe stam,p duty will be outlawed.

I take it there is no provision for gifting from child to parent in CAT as I couldn't find it on revenue site.

Thanks for your help though.

When you do the transfer to your parents this will have to be stamped by the Revenue Commissioners and will have to be accompanied by an auctioneer's market valuation of the property, that is the value of the property, not the amount your parents are willing to pay for it.

Re a gift from a parent to a child this falls within category b so the exemption is €43,400 only, anything above this is liable to CAT.

Thanks that's helpful. I wonder how easy it is to get a realistic market valuation.

Why are you selling it to your parents when you will inherit it again?... why not let them just live in it and continue to pay mortgage on it. If they rented it off you, then you could offset some of the interest against any tax liable on it. I dont see why you want to incur costs now selling it to them and then incur further costs later re-inheriting it from them

As regards realistic valuations, why not ask 2 auctioneers to value it

The house is used as a holiday home. It's in West Clare and we all live in Dublin. It has never been rented and will never be. Their decision, not mine. I'd be of the "Rich Dad, Poor Dad" school. Anyway legally the house is mine, morally it is theirs. They've paid the mortgage and paid for renovations. It's all cause I got married. They are afraid that if something happens to me, the house goes directly to my husband. It's daft because they like my husband and he would do the right thing. I can't will it to them as we have a baby, perhaps 25% could be willed to them.


Will go with the 2 auctioneers valuations I guess or try to persuade them to leave it as is.

Just a thought - there used to be a rule that transfers within a family were subject to 50% of the stamp duty rate otherwise payable. You may know this already but better to check.

I would think also that you are creating a lot of hassle and liabilities for yourself selling to parents and inheriting back ultimately. Can you specifically will it to your child but note that the beneficial owner is your parents until their death?

grawns said:

Also my parents inherited the house they live in so maybe they would be 1st time buyers and not subject to stamp duty anyway?

Click to expand...

Afraid not, as they have owned a house, it doesn't matter that they inherited it.

Wildone said:

Just a thought - there used to be a rule that transfers within a family were subject to 50% of the stamp duty rate otherwise payable. You may know this already but better to check.

I would think also that you are creating a lot of hassle and liabilities for yourself selling to parents and inheriting back ultimately. Can you specifically will it to your child but note that the beneficial owner is your parents until their death?

Click to expand...

Thanks for the info. on stamp duty. I had heard something like this before but have no specifics. Will look into it. You're right, it is a a load of hassle. Will check with my solicitor when I get around to making a will. I know I know! Have put it off as my husband and I can't agree on guardianship for our child as both our parents are ultimately too old.

circle said:

Afraid not, as they have owned a house, it doesn't matter that they inherited it.

Click to expand...

Don't think so...
Can I avail of first time buyer relief if I have previously inherited a house?

Yes. An inheritance is not regarded as a previous purchase and the first time buyer relief can be claimed provided all other conditions of the relief are satisfied.

From [broken link removed]

> Re a gift from a parent to a child this falls within category b so the exemption is €43,400 only, anything above this is liable to CAT.
I assume this is each parent? so €86,800 in total? so they pay CAT on the remainder €13,200? (€3,300 @ 25%). If they can be confirmed as FTBs for stamp duty purposes that might work ok ?

Another thought, is there any way to give them a right of residency until death? so even, if your child inherited the house, your parents could have the right to live there?

Thanks. Going to put it on the backburner for now. Not a pressing issue. Am lucky really.

Another thought on this last night - if I am right about gift tax (€86,800 in total) could you gift this % of the house, with you retaining the rest? 3 names on the house, but combined they would own the majority.

glad you dont have to worry about it for now, but make sure you review it if you have children

I do have a child! Need to make a will and sort this all out. We have organized life assurance at least. Babies make you grow up.

Thanks all.

not to put pressure on you, but that might complicate things

the way i understand it, if you were to die before your child reaches 18, they would be able to make a claim on your estate to be "adequately provided for". This house, as it is legally yours, would form part of your estate and the way succession goes, your child (and spouse possibly) would be first in line to inherit not your parents.

Your child would be entitled to apply to the courts even if you will the house to your parents.

Best of luck, let us know how it all resolves

Thanks, will do.